The Empirical Research On The Effect Of Shadow Banking On Commercial Banks Stability In China

As the creation of financial innovation, the shadow banking was developed rapidly in recent years and it has become an important part of Chinese finance system. On the one hand, shadow banking prompts the commercial bank to innovates its business and improve its profit. On the other hand, with the rapid development of shadow banking, it also exposed the risk, especially the regulatory arbitrage risk; this risk will have a bad effect on the central bank’s macro-control policy and distort the distribution of financial resources, then affect the stability of the commercial banking system.First, based on the soundness researches of domestic and foreign and combined with the condition of china’s shadow banking, considering the definition of shadow banking and on the basic of this definition we will define the scope of shadow banking’s business and then calculate the amount of shadow banking of our country. At the same time, this article also analyses the risk transfer between the shadow banking system and commercial bank.With the quantitative analysis, based on financial soundness indicators system prepares by IMF and macro-prudential indicators proposed by the people’s bank of china, this paper construct the core set of indicators for china’s banking soundness indicator system from the aspects of macroeconomic, financial and banks variable, all the core set of indicators include capital adequacy, bank earnings, asset quality and liquidity, then synthesis banking soundness index BSSI. Secondly, this paper empirically tests the relation between shadow banking and stability of commercial banks with the Granger causality, we found that the growth rate of shadow banking and commercial banks are mutually Granger cause. With the OLS regression model’s result we also found that the growth rate of shadow banking has a negative impact to the stability of commercial bank. Last but not least, this paper also use the panel data to test how the three parts of shadow banking affect the stability of commercial banks. The result showed that the effect was significant and negative correlation, which was to say the growth of shadow banking threshold effect between the scale of shadow banking and the stability of the commercial banks. Therefore, we should paid attention to the shadow banking.At the last was the summary of this paper and suggestions on how to alleviate the pressure on shadow banking. We must correctly guide its standardization so as to make it to promote the stability of the banking system’s and financial market’s positive development.